There Is No Silver Bullet: Investment and Growth in the G7

Abstract
This paper considers the relative importance of investment and productivity in the growth of the G7 countries during the period 1960-89. Investment is the commitment of resources in the expectation of future returns to the investor. Productivity is identified with 'spillovers' of benefits that do not provide incentives for investment. The great preponderance of growth in the US and Canada is due to investment. Investment is more important than productivity for all of the G7 countries, except France, after 1973. Patterns of economic growth have converged for the G7 countries, but important differences remain.

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